Intel Corp. said on Thursday that it plans to build a new wafer fabrication facility at its site in Kiryat Gat, Israel. The new factory, designated Fab 28, will extend Intel’s manufacturing abilities by producing microprocessors using 45nm process technology in the second half of 2008. Construction on the $3.5 billion project is set to begin immediately.

“Our manufacturing network is a strategic asset of unmatched scope and scale that gives Intel the ability to provide customers with leading-edge products in high volume. Today’s announcement of a second 45nm high volume factory reaffirms that Intel platforms will contain the most advanced and innovative technology in the world for years to come,” said Paul Otellini, Intel president and chief executive.

When completed, Fab 28 will become Intel’s seventh 300mm wafer facility. The structure will include approximately 200 000 square feet of clean room space. Over the next several years the project will create more than 2000 Intel jobs at the site. The Israeli government is providing financial incentives for the new facility.

Intel currently operates five 300mm fabs which are located in Oregon, Arizona and New Mexico in addition to Ireland where an expansion of Intel’s 300mm capacity in Ireland (Fab 24-2) is scheduled to begin operations in the first quarter of next year. In July Intel announced plans to invest more than $3 billion to build another 300mm fab, Fab 32 in Chandler, Arizona. The Fab 32 will also make chips using 45nm process technology, but will begin in the second half of 2007, months earlier compared to the Fab 28.

Manufacturing with 300mm wafers (about 12 inches in diameter) dramatically increases the ability to produce semiconductors at a lower cost compared with more commonly used 200mm (eight-inch) wafers. The bigger wafers lower production cost per chip while diminishing overall use of resources. Using 300mm manufacturing technology consumes 40 percent less energy and water per chip than a 200mm wafer factory. Intel’s 45nm technology, which will first be put in high volume production at Fab 32, will allow chip circuitry to be built at about half the size of today’s standard 90nm technology.